Chinese hotpot chain Haidilao to close 300 restaurants by end of 2021 following mass expansion

Chinese hotpot chain Haidilao will close about 300 underperforming locations by December 31 following a rapid roll-out strategy last year, the company announced in a filing to the Hong Kong Exchanges and Clearing late on Friday.

The restaurants that will be shuttered are with relatively low customer traffic and lower-than-expected business performance. Some stores will be temporarily closed for no more than two years, the company said, although it didn't give any dates.

The chain will also slow down its business expansion plan and refrain from opening new restaurants on a large scale once the average table turnover rate drops below four times a day.

The chain expanded at a record high pace in 2020, with an astonishing 544 new restaurants opened last year – an average of 1.5 new restaurants per day. As of June 30, Haidilao had 1,597 restaurants globally, according to the company's 2021 interim report.

Over the past two years, Haidilao's table turnover rate has fallen dramatically, with the average rate sinking to three times per day in the first half of 2021 from 4.8 times per day in 2019. The figure for newly added restaurants was even lower, at 2.3 times per day.

This has resulted in significant losses for the company's net profit, the growth rate of which saw a decline from 8.81 percent in 2019 to 1.08 percent in 2020 and then to 0.48 percent in the first half of this year.